Oil ends down 32% in Oct., worst month ever on Nymex

NEW YORK -- Oil prices ended the week with a modest rally Friday but couldn't erase one ugly October: Crude capped its biggest monthly drop since futures trading began 25 years ago, weighed down as a deflated U.S. economy crushes demand for fuel.

Oil's monumental collapse — prices fell 32% for the month — has stunned oil-producing countries while giving cash-strapped U.S. consumers a rare dose of relief. Pump prices have fallen by almost half since their summer peak above $4 a gallon — a huge drop that's expected to result in more than $100 billion in annual savings for American households.

"That's a pretty powerful stimulus to consumers," said Adam Sieminski, chief energy economist at Deutsche Bank Global Markets in Washington.

After trading lower most of the day, oil prices staged a late-session surge on the back of a Wall Street rally. Oil investors have been tracking equity indexes as a barometer of global economic health. The Dow Jones industrial average rose 144 points.

Light, sweet crude for December delivery rose $1.85 to settle at $67.81 a barrel on the New York Mercantile Exchange, after earlier falling as low as $63.12.

Prices closed at $100.64 a barrel on the last trading day in September. That gives oil the biggest monthly slide since the launch of the Nymex crude futures contract in 1983. The previous record was a 30% drop set in February 1986.

"We're seeing a huge paradigm shift," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "We went from $100 at the beginning of the month to around $65 today. It's quite a decline and shows how weak the demand picture really is."

Crude hit a record price of $147.27 set on July 11.

At the pump, a gallon of regular gasoline fell 4.3 cents overnight to a national average of $2.504, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices hit a record $4.114 a gallon on July 17.

Cheaper gas has been a rare bit of good news for consumers rattled by huge drops in the stock market, rising mortgage payments and difficulty in obtaining credit. According to Deutsche Bank research, for every dollar that comes off pump prices, U.S. households save a $100 billion a year — money that can be spent on other goods and services to help jolt the economy.